Major law firms funneling money from state, local governments to Dem candidates, watchdog says

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Several of the country's most prestigious law firms are siphoning taxpayer money from state and local governments through public contracts and using the profits in part to donate almost exclusively to Democratic candidates, according to a watchdog group that is warning Republican-led red states to stop working with these "left-wing activist" firms.

Alliance for Consumers (AFC), a nonprofit dedicated to consumer protection, has published a new "consumer protection report," first seen by Fox News Digital, building on past research that outlines the so-called "Shady Trial Lawyer Pipeline" of politicians handing out lucrative public contracts to trial lawyers who give millions of dollars to liberal political campaigns.

At the heart of this "pipeline" are eight law firms, referred to in the report as the "Shady Eight," that each have been ranked by the National Law Journal or Legal500 as a leader among plaintiff-side trial firms. The firms are Morgan & Morgan, Lieff Cabraser, Motley Rice, Baron & Budd, Grant & Eisenhofer, Berger Montague, Cohen Milstein, and Simmons Hanly.

"What resonates the most, what's so staggering are the percentages — 99% or 100% of all political donations going to Democrats and allied political groups," AFC Executive Director O.H. Skinner told Fox News Digital. "These are law firms that collectively have thousands of people, and often zero dollars are going to a Republican candidate or committee. This is stark and ongoing. The level of partisanship and political commitment to only one side of the aisle stands out here even in what is otherwise described as polarized political times. There's simply no nuance with these firms and trial lawyers."

Capitol Hill and dollar signs. (Fox News)

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The post-2020 data presented in the report, which is new and has yet to be reported, shows a striking level of partisanship within these eight law firms.

The firms generated at least $18 million in combined political donations to committees and candidates from 2017 to 2022, according to Federal Election Commission records. Of that total, over $3 million was given in federal donations during 2021 and 2022 — 99% of which went to Democratic campaigns and allied political committees.

"The lowest contribution percentage given by a member of the Shady Eight to Democrats and their allies between 2021 and 2022 was from Grant Eisenhofer, with 97% of donations going to support Democratic campaigns and allied political committees," the report states. "On the other hand, three firms showed a 100% commitment to Democrats and their allies in the most recent midterm period."

Lieff Cabraser, for example, did not give a single dollar to a Republican.

The top recipients of money from the eight firms for midterm Senate races were Democratic Sens. Chuck Schumer, N.Y., Raphael Warnock, Ga., Catherine Cortez Masto, Nev., Richard Blumenthal, Conn., and Maggie Hassan, N.H. Each of these candidates was re-elected in November.

These totals account for the money given by the firms directly, their 1,400 or so combined lawyers, and other employees and staff.

"This partisan political giving is supported by money from lucrative public contracts signed by politicians and public officials, money that really belongs in the pockets of taxpayers and consumers," the report states.

Senate Majority Leader Chuck Schumer, D-N.Y., speaks at a press conference at the U.S. Capitol Building on Dec. 7, 2022. (Anna Moneymaker/Getty Images)

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While the specific arrangements between these law firms and state or local governments can vary, typically they involve a state attorney general hiring an outside law firm to represent the state in a lawsuit and then paying those lawyers a percentage of any judgment or settlement from the litigation. However, these contracts can lead to ethical problems and conflicts of interest, such as the plaintiffs' lawyers inflating the amount sought in a lawsuit to maximize their potential cut in the litigation rather than what is in the best interest of the taxpayer, who is ultimately paying the bill.

"Consumers and taxpayers lose out from the Shady Trial Lawyer Pipeline in many ways, but one particularly dire aspect is how the public contracts that are the gateway to the Shady Trial Lawyer Pipeline are so often missing basic protections (including basic ethics protections) that should be in all outside-counsel contracts," the report states. "The contracts can be only a few pages long, sometimes look like they were written by the trial lawyers themselves, and have glaring weaknesses."

The AFC notes these contracts often have no expiration dates or language limiting the arrangement to just a single case or defendant; rarely include "appropriate conflicts protection" despite these firms often representing multiple governments that may have different interests in a given case; often don't require that the trial lawyers provide the best pricing terms that lawyers are offering; and almost never ensure that contingency fees for the trial lawyers won't be taken out of money set aside for restitution to victims.

In a 2013 research paper, the Institute for Legal Reform found that these contingency-fee arrangements have led to "the violation of important constitutional rights of defendants, who find themselves facing lawsuits that combine the political power of the state and the financial power of deep-pocketed plaintiffs' lawyers in the hopes of imposing substantial liability."

According to Skinner, the goal of AFC's research and advocacy is to "improve consumer protection and consumer outcomes," a point echoed in the report.

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"The 'Shady Eight' are stark examples — although far from the only ones — of how the Shady Trial Lawyer Pipeline works, with politicians feeding sweetheart contracts to trial lawyers who give 99% of their political donations to liberals and will happily turn around and pump millions of dollars into left-leaning candidates, committees, and allied organizations," the report states. "Good governance and honest stewardship call for better. The consumer should never be on the losing side of a left-wing political money game like what is on display in the Shady Trial Lawyer Pipeline."

Democrat-run blue states such as New Jersey and New Mexico are not the only states working with these firms. Indeed, red states such as Kentucky, Indiana, Mississippi and others are also contracting with them.

As a result, AFC just wrote a letter, first seen by Fox News Digital, to red state governors highlighting the "pipeline" described in its report and calling on them to stop working with these firms.

"Make no mistake: through the Shady Trial Lawyer Pipeline, trial lawyers use public contracts to siphon money from your states toward political efforts that are in many cases totally antagonistic to your values and those of your constituents," wrote Skinner. "At Alliance for Consumers, we believe it is important for conservatives like yourself to understand what is happening with the Shady Trial Lawyer Pipeline, so you can help stop its abuse of consumers and your state. That is why I am sending you this Consumer Protection Report and calling on you to take immediate action to dismantle the Shady Trial Lawyer Pipeline in your state."

Skinner cited the attorneys general of Kansas and Iowa last month terminating contracts with Morgan & Morgan, which had contracted with the states on a contingency fee basis, as examples of what can be done. The firm's founder has a reported relationship with the Biden family.

Skinner also described how, in 2021, the attorney general of Montana conducted a review of outside contracts, found its agreements with Motley Rice had few protections and weren't favorable for the state, and ended the relationship.

Montana Attorney General Austin Knudsen. (Fox News)

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"Attorney General [Austin] Knudsen initiated a review of outside counsel contracts at the outset of his term to ensure Montana taxpayers are getting the best bang for their buck," Knudsen spokeswoman Emilee Cantrell said at the time. "We found that it was common practice for previous administrations to hand out millions to their liberal trial lawyer buddies, who then turn around and help fund left-wing political groups that Montanans oppose. We expect law firms we do business with to always work for the best interest of our state."

In a more recent example from February, Oklahoma Attorney General Gentner Drummond terminated a contract with the firm Whitten Burrage, stating in a letter, "While your efforts under the contract have certainly succeeded in enriching yourselves far beyond what you deserve, those efforts have fallen far short of delivering the results that Oklahomans are entitled to receive." The firm will receive $34 million in fees related to an opioid settlement.

According to Skinner, such concerns extend nationwide.

Republican Kansas Attorney General Kris Kobach. (AP Photo/Reed Hoffmann, File)

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"This is a rampant, widespread issue," he told Fox News Digital. "Ruby red states are sending big paydays to hardcore partisans who are turning around and donating to left-wing causes and left-wing candidates. This is a salient, real deal problem that is easy to see and people should pay attention to it."

When asked why red states would agree to work with left-wing law firms in the first place, Skinner said these firms do not advertise their political leanings while public officials do not do sufficient investigative work and there has not been a "robust watchdog in this space."

As for the firms, Skinner suggested that, from a "partisan activist perspective," they are getting millions of dollars to "feed their political operations." Another reason, he added, is that when they take on a climate change case or one against gun manufacturers, they can say they work for both sides and not appear overtly political. "They use it to validate themselves," he said.

"It wouldn't surprise me," added Skinner, "if these firms were sitting back and cackling about pulling in big money from the reddest parts of America and funneling it to left-wing candidates and causes, using in part those very same dollars."

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Fox News Digital reached out to all eight law firms for comment for this story. Only Morgan & Morgan responded, with founder John Morgan rejecting the notion that his firm all gives to Democrats as "incorrect and just wrong."

"In Florida alone, our attorneys have given and raised millions to the leaders of the Republican Legislature," he said. "Our firm also represented the last two Senate presidents and the party in elections and recounts. You should verify with Wilton Simpson, the current agriculture commissioner in Florida, and current Senate President, Kathleen Passidomo," both of whom are Republicans.

While Morgan & Morgan has donated to Republicans in Florida, AFC's figures were focused specifically on FEC-recorded, or federally registered, donations.